global_futures 04/00

The Research Group on the Global Future's e-mail newsletter

Research Group on the Global FutureCenter for Applied Policy Research (CAP)Munich, Germany

"No disinterested mind can survey the period in question without being irresistably drawn to the conclusion that the very genius for commercial development and organization ... soon begat an intent and purpose to exclude others."-- Edward White, Chief Justice of the US Supreme Court, 1911

(1) Taking the Long View on Microsoft(2) Bioinformatics and Money(3) Fighting Globalization?(4) Noted in Passing(5) New Feature: Last Year

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(1) TAKING THE LONG VIEW ON MICROSOFT

US Judge Penfield Jackson ruled on April 3 that Microsoft was indeed guilty of violating American anti-trust law. This ruling had been clearly foreshadowed by the judge's findings of fact late last year. The findings of fact, which lay out the facts based on evidence presented at the trial and are not generally challengeable in appeals, were so strongly worded that no one should have been surprised by the judge's verdict.

The current ruling is equally clear and scathing. The judge wrote that Microsoft put an "oppressive thumb on the scale of competitive fortune" and that "Microsoft mounted a deliberate assault upon entrepreneurial efforts that, left to rise or fall on their own merits, could well have enabled the introduction of competition into the market for Intel-compatible PC operating systems."

Finding Microsoft guilty is the second step in a protracted legal process. The next step will be the assessment of a penalty, and that step is now the focus of intense business, political, and technical commentary.

After a penalty is imposed, Microsoft will almost certainly appeal the decision, first to a circuit appeals court and then, if necessary, to the US Supreme Court. The guilty finding also gives support to both a European Commission antitrust inquiry and numerous civil suits that are pending in various US courts against Microsoft. It is a safe bet that the company's lawyers will be defending its conduct for a long time to come.

In the frenzy to parse the judge's ruling and to try to interpret the smoke signals from failed settlement talks between Microsoft and the US Department of Justice, experts are all over the map on what will come next. But looking back over two other epic anti-trust battles -- a historical perspective sure to be shared by the judges who will preside over the case and its appeals -- makes breaking up the corporation seem a fairly likely remedy.

Microsoft strongly resembles both Standard Oil at the beginning of the twentieth century and AT&T in the 1970s, with the resemblance to Standard Oil being more striking and revealing. Both of the earlier companies dominated a key segment of the American economy, both had many friends at the highest levels of government, both were simultaneously loved and hated by American consumers, both fought anti-trust action vigorously in the courts and in the press, claiming that they did not have a monopoly and even if they did the public was better off because of it, and both were broken up by orders of federal judges. Importantly, both breakups spawned a wave of innovation in their respective industries benefiting not only customers and consumers but also bringing vastly increased wealth to the companies' owners.

Daniel Yergin's (http://eprofile.cera.com/) book The Prize offers an account of the Standard Oil breakup that could be drawn straight from today's Microsoft headlines. The trial judge "denounced the 'studied insolence' of Standard's lawyers and regretted 'the inadequacy of the punishment' [a fine]." When the case reached the Supreme Court, the Chief Justice said "No disinterested mind can survey the period in question without being irresistably drawn to the conclusion that the very genius for commercial development and organization ... soon begat an intent and purpose to exclude others."

John D. Rockefeller and other leading officers of Standard Oil had argued that their company had brought order to a chaotic market, to the lasting benefit of consumers. They argued that standard products had done much to build the industry and had helped the entire economy. They argued that they had been leading innovators in the oil industry. They argued that the existence and prosperity of other companies in the field demonstrated that Standard was not a monopoly. They argued that Standard's position as a company was precarious and constantly threatened by changes in the industry. Finally, they argued that a breakup was virtually impossible. None of these arguments weighed more on the scale of justice than violation of anti-trust law.

What was the end result? Yergin gives a clear-eyed assessment: Just before the dissolution, one of John D. Rockefeller's advisers had thought that Rockefeller should sell some of his Standard Oil shares, as the price he assumed was at its top and would fall with the breakup. Rockefeller refused; he knew better. ... Within a year of the dissolution of Standard Oil, the value of the shares of the successor companies had mostly doubled; ... Nobody came out of this better or richer than the man who owned a quarter of all the shares, John D. Rockefeller.

Taking the long view, a breakup just might be the best thing that ever happened to Bill Gates.

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(2) BIOINFORMATICS AND MONEY

Despite a recent statement by US President Bill Clinton and UK Prime Minister Tony Blair encouraging private firms to release raw data on human gene sequences, the tension between private gain and scientific research will not go away any time soon. As scientists around the world close the remaining gaps in the human genome sequence, attention is increasingly turning to applications for the raw data produced by the Human Genome Project (http://www.ornl.gov/hgmis/). The promise of the Project, which will be completed years ahead of schedule and under its projected cost, has always been that knowing the human gene sequence will allow medical scientists to understand diseases at the genetic level, leading to more forms of treatment, permanent cures, and possibly even prevention through genetic interventions.

Now that far more data are available and areas of likely interest are becoming clearer, publicly funded researchers and private sector researchers are starting to clash about who exactly is allowed to know what and when. There is one fundamental point of agreement: raw fundamental genome sequence data is not patentable - not in the US, and not in Europe. There is disagreement over how fast private companies will make the data that they find available to the scientific community, and under what conditions. Private companies (for example http://www.celera.com) are concerned that competitors could take advantage of the fruits of their research for free. They are also concerned that their results will not be accepted by the scientific community without wide-ranging access to the databases supporting the results. The major scientific journals, such as Nature or Science, are also struggling to find editorial policies that allow for rigorous checking of results while also recognizing that industry needs protections to produce innovation.

A great deal of bombast will probably be expended over this issue in the next two years, but getting the incentives right may determine whether humanity receives the promised benefits of the Genome Project or whether the sequence becomes a subject of merely academic interest.

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(3) FIGHTING GLOBALIZATION?

The people who brought you the battle in Seattle (http://www.50years.org/ and http://www.a16.org/ for example) are gearing up for more protests peaking April 16 and 17 around meetings of the IMF and World Bank in Washington, DC. Behind headline-grabbing slogans - "Shut down the IMF and World Bank" - are a widely assorted group of activists and discordant aims.

With a reach that is itself a product of globalization, protesters are organizing around the US and around the globe to focus media and political attention on complex issues of international finance, trade, labor and ecology. Such a disparate coalition is unlikely to produce coherent demands, and indeed, the interests of old-line labor unions (e.g., Metropolitan Washington Council of the AFL-CIO) are quite different from those of radical environmentalists (e.g., DC Area Earth First! Collective), and general political protesters (e.g., Young Communist League - Midwest or DC Lesbian Avengers).

Their web sites and traffic on the e-mail mailing lists show a mix of openness (anyone with an e-mail address can subscribe to some of the lists) and paranoia. Practical tips on behavior during a demonstration mix with an insistence that the press hides the real story. Postings note rhetorical support from political leaders while fostering an "us-against-the-system" solidarity. Demonstrators are trying to co-opt institutions at the same time that leaders are trying to co-opt the discontent that the demonstrations represent.

(For a contentious view of this dance, read the interview with Lori Wallach in Foreign Policy)

The questions now are whether these demonstrations will be more effective than the ones in Seattle, and whether the organizers have a clear agenda to bring into global discussions.

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(5) NOTED IN PASSING

1. What teenagers really do online

Tia O'Brien of the San Jose Mercury News writes about teenagers' use of the internet. Based on diaries kept by a number of high-usage teens and correlated with people doing larger studies, O'Brien concludes that teens use the net to follow existing interests, make connections, and try out new independence. For both adults and teens e-mail, search engines, and research were the top three net activities. Teens followed with: playing games, visiting chat rooms, visiting music sites and instant messaging. One of the most interesting discoveries was how obvious it was for teens to connect with people around the world.

Without piling on in the current German political discussion about easing immigration for software experts, we would like to point out an article (April 8, 2000, page 3) from the English edition of the Frankfurter Allgemeine Zeitung:

"Germany Is an Unappealing Dot on Screen to Indian Experts" notes that the specialists in Indian hotspots of computer technology know all about Chancellor Schroeder's initiative and brutally sums up the reaction: they are not interested.

Specialists, "who live in places like Bangalore and Hyderabad, admit that they do not know much about Germany. But they go on to say that what they do know is negative. Hardly anyone there speaks English; vegetarians are not catered for, and Indian communities do not exist." Television images of skinhead violence against Turks have also traveled around the globe, with predictable results. The article suggests that specialists with the world - or more specifically, California - to choose from, will not be making Germany their choice.

A debate about immigration may be a healthy one for German politics to have, but in worldwide competition for talent, making work permits marginally easier to acquire will have very little impact.

How fast is the global future changing? By taking a glance over our shoulders at the issues that were interesting us last year, we can make a quick measurement of the rate of change. Each month, we will publish a short excerpt from last year's global_futures along with an update on the issue raised.

In April 1999, the Center for Applied Research had just hosted a conference on Outlining the Future that brought together many of Germany's leading future researchers. One of the key questions of the workshop was the role of governments, particularly European governments, in adapting to the demands of the internet era. Our speakers suggested that governments lagged well behind business and society in adopting new technology and in responding to challenges presented by technology. Politics "is acting as if all of these [social] structures were still completely stable," noted CAP Director Werner Weidenfeld.

One year later, the European Union devoted much of its Lisbon summit meeting to discussions on creating the right conditions for an information and high technology economy. Encouragingly, the leaders of the EU countries set forth some measures to be taken by the middle and end of this year. Governments are at least beginning to get the idea of the responsiveness necessary to build a competitive economy. The governments also called for the Member States to ensure generalised electronic access to main basic public services by 2003.

The conclusions devote twelve of nineteen pages to building a new economy and never once use the word America.

global_futures also offers an interactive forum. Recommendations,letters, and tips are welcomed by the editors, particularly on the topics of the digital future, biotechnology, sustainability and the new economy. Send all feedback to mailto:fgz@lrz.uni-muenchen.de.

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global_futures

Sascha Meinert, Douglas Merrill, Patrick Meyer, Juergen Turek

Research Group on the Global FutureCenter for Applied Policy ResearchGeschwister Scholl InstituteLudwig-Maximilian University of MunichMaria-Theresia-Strasse 21D-81675 Munich, Germanymailto:fgz@lrz.uni-muenchen.de.